To Stream or Not to Stream

To stream, or not to stream: that is the question:
Whether it serves music better to suffer
The slings and arrows of outraged fans,
Or to take arms against a sea of vested interests,
And by opposing end them?

I am loathe to dip my toe into the cesspool that is the discussion on streaming. A myriad bloggers on one side, disenchanted artists sinking gently in the middle, and a large stinking pile of unfulfilled promises and vested interests on the other. Surely there is nothing more that can be said. And yet. And yet. Much has changed over the last few weeks.

So let us, Dear Readers, triangulate around some interesting new landmarks:

1) The recent revelations about the Sony contract with Spotify, as published on the verge website.
2) Universal’s recent posturing (possibly egged on by Apple) that free streaming on Spotify is damaging music.
3) The recent “cleansing of Youtube” of King Crimson material, which has led many fans to feel that they have been robbed of one of the potential ways of spreading the word about their favourite music.

Let us begin with Sony’s Spotify contract. Much was unsurprising. Sony receives vast advances, which they may, or may not, choose to share with their artists. Well yes, we always assumed as much. They are a voracious major label (spit spit). This was never a fair playfield. But two parts were informative. The first is that Spotify can take 15% of third party advertising “off the top” ie. not include it in the money that they account to artists or rights holder. This seems to be little more than a cynical reinvention of the “packaging deduction” much loved by major labels – meaning that the royalty rate that Spotify pays is not quite a high as their PR department would have us believe. The second, more significant in my view, is that Sony receives vast amounts (up to $9 million) in free advertising on Spotify. That one fact opens new worlds. Why?

i) The least interesting reason : because this advertising will definitely not be accounted to those troublesome artists. It shows the inherent conflict of interest within a major label when they do a deal for “their” music – it is in their financial interest to find sources of income, which do not have to be divided up by their royalty department.
ii) A more interesting reason : because it creates a strangely circular perspective on Universal’s complaint about the income they receive from the Spotify’s Freemium model ie. the one paid for by advertising (see point two – another new fact to come light this week). We now know that the income from that model is partly being undermined by the fact that Spotify, rather than selling the advertising (and returning more accountable revenue to the labels) is actually being forced to give much of this advertising to the labels…who then in turn complain about the lack of revenue.
iii) And this is where it gets really interesting : because this advertising is probably the most valuable commodity under discussion, yet neither Spotify nor the labels seem to know it. During a recent outpouring from the erstwhile “Lord of Vision” at BootlegTV (yes, David, the Tall Pointy One, Singleton), he suggested that DGM was not interested in appearing on Spotify as the financial terms were laughably poor (even on Sony’s contract the gross payout to a label would be just $2,250 for 1 million streams). However, David went on to say that he would “GIVE THE MUSIC TO SPOTIFY FOR FREE IF HE COULD HAVE ACCESS TO THE ADVERTIZING EVERY TIME SOMEONE STREAMED A TRACK. THAT WOULD BE FAR MORE VALUABLE THAN ANY DOLLAR AMOUNT.”

So why does David find this advertising so valuable, while to Sony it is just a small insignificant bonus. The answer lies in the relationship with the artist. All Sony has to sell is music. You thus have the fundamentally flawed proposal that Sony advertises music for sale on Spotify, a service which, by its very nature renders such music sales obsolete. The problem for Sony, or any conventional record label, is that when music by Mark Ronson is playing, they have nothing to advertise other than more music by Mark Ronson (or some other Sony artist). How different that is for an artist, or an artist’s management company like DGM. While a King Crimson track is playing, they could inform you of a forthcoming KC concert in your area, or KC merchandise, or a site with endless rare KC downloads, or even a book about KC. How valuable that advertising suddenly becomes. You can speak directly to a fan, who is listening to your music at that exact moment. That advertising may have comparatively little value to a label, but it has huge value to the artist. Which leads to the obvious radical suggestion (and sadly I doubt that Daniel Ek, CEO of Spotify is reading): Don’t give the artist any streaming royalties at all. Give them the advertising. (And fool that I am, I do not even demand shares in your company, Mr Ek, for telling you so.)

This leads to the third point of triangulation – fans, who are disappointed that music has been removed from Youtube. This was perfectly expressed in a helpful comment from Mr Frank Hadlich who described Youtube as a “try and taste” area. And therein lies the conundrum. Of course, all artists and labels are supportive of their music being part of a “try and taste” area – an essential part of finding new fans. The problem is that Youtube, like all the other streaming services, is seeking to move beyond that into becoming a “universal-music-library-stop-buying-music” service.

Philosophically, I in fact am very open to such an idea. Ideally, music should be free and how wonderful if we could all have access to all of it all the time wherever we are. The problem is how to embrace such a world with business constraints (engineers and studios needing paying, artists requiring royalties) from a former world. I can offer any number of conflicting points of view :

1) Music should be free.
2) If it is, there will however be insufficient money to support those who produce it. Some recorded music can come into the world as a hobby. Much cannot. Or at least only of less good quality.
3) DGM is one of the few labels in the world with rising physical sales. It is also – perhaps coincidentally, perhaps not – a “digital stop-out” with regard to streaming.
4) If an artist’s catalogue is not continuously presented to new generations using current technology (which would now be streaming) that artist sinks from view – Frank Zappa sadly comes to mind.

Such thinking leads me to the view that “Pledge Music” may be part of the new landscape. The music is free, but those who are able to support it, do so. I am actively considering exactly such an approach with the new batch of Vicar music (and would welcome thoughts). An interesting toe in the water for DGM. It also leads to the fact that music does need to be on Youtube – sufficient to be a taster, but insufficient to be a main course. And to that extent, King Crimson music will return on the KC channel.